Rohit Kapoor, Vice Chairman and CEO, commented: "In the second quarter, EXL generated rapid growth year-over-year as well as sequentially. As expected, our transformation practice accelerated, and achieved record quarterly revenues and gross profits. Growth was driven by strong demand for decision analytics services, particularly in the insurance and banking verticals.
I am pleased to announce that we have won a new strategic account with a global bank for transformation services. The role of analytics in our organization is increasing, and differentiating us as a company.
In addition, we saw excellent growth this quarter through service expansions with our large, global clients, and we see robust opportunity to expand these partnerships further. At the same time, our seventeen new client wins in the first half of 2012 is more than double the number of new client wins during the first half of 2011."
Vishal Chhibbar, CFO, commented: "In the second quarter, EXL achieved revenues of $108.0 million, up 27% year-over-year, or 33% on a constant currency basis. Sequentially, revenues grew by 6% on a constant currency basis. During the quarter, margins expanded year-over-year and sequentially, driven by foreign exchange as well as a consequence of the rapid growth in our transformation business. This margin expansion more than offset the headwinds from wage increases implemented during the quarter. Our hedging strategy performed as expected, ensuring stable earnings per share despite foreign exchange volatility."
For 2012, we are maintaining our adjusted diluted EPS guidance of $1.50 to $1.55. Assuming a second half of 2012 exchange rate of 55 Indian rupees to the US dollar, we now project revenues of $438 million to $442 million, primarily due to ongoing weakness in the rupee. Since we first provided 2012 guidance in March at an exchange rate of 49 rupees to the dollar, the rupee has depreciated by over 10%, creating a revenue headwind of approximately $10 million. On a constant currency basis, the midpoint of our revenue guidance remains the same."
Financial Highlights — Second Quarter 2012
Reconciliations of adjusted financial measures to GAAP are included at the end of this release.
Revenues for the quarter ended June 30, 2012 were $108.0 million compared to $85.0 million for the quarter ended June 30, 2011 and $104.6 million for the quarter ended March 31, 2012. Outsourcing services revenues for the quarter ended June 30, 2012 were $88.9 million compared to $68.7 million for the quarter ended June 30, 2011 and $89.7 million for the quarter ended March 31, 2012. Transformation services revenues for the quarter ended June 30, 2012 were $19.1 million compared to $16.3 million in the quarter ended June 30, 2011 and $14.9 million for the quarter ended March 31, 2012.
Gross margin for the quarter ended June 30, 2012 was 38.9% compared to 38.8% for the quarter ended June 30, 2011 and 36.3% for the quarter ended March 31, 2012. Outsourcing services gross margin for the quarter ended June 30, 2012 was 38.7% compared to 39.9% for the quarter ended June 30, 2011 and 37.1% for the quarter ended March 31, 2012. Transformation services gross margin for the quarter ended June 30, 2012 was 39.6% compared to 34.6% for the quarter ended June 30, 2011 and 31.5% for the quarter ended March 31, 2012.
Operating margin for the quarter ended June 30, 2012 was 13.3% compared to 11.1% for the quarter ended June 30, 2011 and 10.0% for the quarter ended March 31, 2012. Adjusted operating margin for the quarter ended June 30, 2012 was 17.1% compared to 15.5% for the quarter ended June 30, 2011 and 13.9% for the quarter ended March 31, 2012.
Net income for the quarter ended June 30, 2012 was $9.1 million compared to $8.5 million for the quarter ended June 30, 2011 and $8.9 million for the quarter ended March 31, 2012. Adjusted EBITDA for the quarter ended June 30, 2012 was $23.1 million compared to $17.4 million for the quarter ended June 30, 2011 and $19.5 million for the quarter ended March 31, 2012.
Diluted earnings per share remain flat at $0.27 for each of the quarter ended June 30, 2012, June 30, 2011 and March 31, 2012. Adjusted diluted earnings per share for the quarter ended June 30, 2012 was $0.36 compared to $0.35 for the quarter ended June 30, 2011 and $0.36 for the quarter ended March 31, 2012.
Business Announcements
Won a new strategic account with a global bank for transformation services.
Won nine new clients during the quarter, including six transformation clients and three outsourcing clients.
Expanded multiple outsourcing services relationships, including migrating 24 new processes in the second quarter of 2012.
Launched a new, 700-seat delivery center in a tax-advantaged Special Economic Zone (SEZ) in Pune, India to deliver complex operations in insurance, finance and accounting and other services.
Entered into a strategic alliance with MicroStrategy Incorporated to develop advanced risk analytics for the banking sector.
Named one of the top 10 learning and development organizations in India by the World HRD Congress CLO Awards.
Recognized in the Top 100 Chief Information Security Officer (CISO) Awards for 2012.
Grew headcount as of June 30, 2012 to approximately 19,500, compared to approximately 17,400 as of June 30, 2011 and 19,200 as of March 31, 2012.
Managed employee attrition for the quarter ended June 30, 2012 to 28.4%, compared to 29.7% for the quarter ended March 31, 2012.
2012 Outlook
Assuming a second half of 2012 exchange rate of 55 Indian rupees to the US dollar, we now project revenues of $438 million to $442 million.
Adjusted earnings per share, excluding the impact of stock-based compensation expense, amortization of intangibles and associated tax impacts, remains the same at $1.50 to $1.55. |
